Spring Statement – business industry reaction

The Chancellor, Rachel Reeves, has delivered her Spring Statement outlining the Government’s economic plans. The data showed public sector net borrowing set to fall from 4.3% this year, decreasing to 1.8% in 2029–30.

The Office for Budget Responsibility lowers growth forecasts to 1.1% for 2026 but upgrades the outlook in 2027 and 2028 to 1.6%. But the forecasts don’t take into account the impact from the jump in energy prices and turbulence caused by the escalating war in Ukraine.

Responding to the Chancellor’s Spring Forecast statement, Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said: “Inaction from the Chancellor is not enough for the UK’s 5.7 million small businesses and self-employed who are being squeezed by cost pressures and facing a new cost crunch about to hit in April. We’re a month away from employment costs going up, business rates going up and energy bills going up. The Chancellor missed the chance today to address the costs stack about to hit small firms.

“The downgrading of the growth forecast for this year will be no surprise to small businesses, where cost burdens have already started reducing growth plans, cashflow and job creation in our local communities.

“Given the heightened global tensions of recent days, if there is another energy price crisis the Government must stand ready to bring forward a package of help for small business energy consumers, akin to during the last huge price spike.

“As the April costs stack bites, the Chancellor must give assurance that she’ll take decisive action to ease the taxes and costs imperilling small firms and the self-employed, and in turn imperilling the jobs, opportunities and local prosperity they could otherwise bring.”

Anna Leach, Chief Economist of the Institute of Directors, said: “The Spring Forecast achieved half of its objectives. No policy speculation and no new tax announcements will definitely be welcomed by business leaders. But public spending has been raised further, and there’s an assessment of the fiscal rules, despite previous commitments. Half of a welcome improvement in fiscal headroom is spent on SEND and local authority budgets, amidst warnings from the OBR that future increases in the tax burden risk competitiveness and growth. Meanwhile that improvement in headroom – delivered through equity market over-performance – could be wiped out by recent global developments.

“Two key areas stand out from today’s OBR report: the negative impact on growth coming through from past policies, and warnings of further risks to growth down the line. Projected growth has been lowered in the short-term as the impact on the labour market and confidence from chaotic policy management, and increased employment costs, weigh more heavily than anticipated. Inflation only comes down quicker in the forecast due to a weaker economy. How businesses manage the significant cost increases with which they are grappling is highlighted as a risk. Progress on planning reform stands to be reassessed in the Autumn – the biggest area where government policy has been assessed as growth-positive.  And recent developments in the Middle East are not in the central forecast.

“The UK’s growth outlook is increasingly fragile and risks are only growing. Bolder and swifter action is needed to remove blockers to growth from the planning system, address damage done to the labour market, and bring down costs for business.”

James Burgess, Head of Commercial  Atradius UK, said  “I’m sure this so-called ‘boring’ Spring Statement will give businesses some much needed breathing room following the significant measures announced in last November’s Autumn Budget. But that breathing room won’t feel like it on the ground, as businesses will be using this headspace to tackle underlying pressures.

“Companies should use this period of fiscal predictability to strengthen their financial position – reviewing buyer risk, tightening credit control, and leveraging trade credit insurance to safeguard against potential defaults.”

Derek Ryan, CEO of North West Europe at Bibby Financial Services: said “The Chancellor’s Spring Statement is unlikely to shift the dial for SMEs that were hoping for fresh measures to unlock growth. With 46 percent* of firms delaying major investment decisions until after today’s announcement, this was an important moment to unlock pent-up investment – even if the Government’s focus for today is on stability, rather than new fiscal intervention.

“Many small business leaders will still be grappling with the high costs of doing business and the elevated tax burden, both of which continue to weigh on hiring and investment decisions. Today’s absence of targeted SME measures may mean that uncertainty lingers, doing very little for business confidence.

“SMEs won’t have expected a silver bullet from today, but they do need a clear and consistent strategy that supports investment, improves access to finance and eases the pressures that constrain growth. Stability is welcome – but without visible momentum behind small business growth, SME confidence risks remaining stuck in neutral at a time when the UK economy needs it in gear.”